US recovery boosts dollar, hits euro (page 2 of 2)

However, repeated warnings of intervention by Japanese officials to weaken the currency, limited the yen's upward trend, which hurt the Japanese exports.

The Ministry of Finance's vice minister, Zembei Mizoguchi, stated that he did not see the conditions in place for the yen to strengthen further, adding that Finance Ministry would take action as needed. Japan spent a record nine trillion yen ($76 billion) on currency intervention this year.

In the week ahead, market will keep a close eye on the Japanese stock market and economic data such as unemployment figures, retails sales and industrial production.

Range for the week: 115.00 -120.00

Sterling

The sterling fell against the dollar at start of the week on optimism about the U.S. economic outlook and lack of British data that gave a little chance for independent movement by the pound.

As the week progressed, the pound rallied across the board on news that Bank of England acknowledged signs of recovery in the British economy. The BoE's committee, which voted to cut interest rates in July, decided unanimously to leave interest rates unchanged in August and reported that retail spending and the housing market has been surprisingly strong.

Moreover, the sterling got support from data indicating government finances were in better shape than expected. The British government's cash position swung into surplus in July, boosted by seasonal corporate tax inflows and record value-added tax receipts.

Ahead of the weekend, the pound trimmed its early gains after July retail sales dropped 0.4 pct on the month, less than market forecasts. Business investment in Britain also fell in the second quarter of 2003 to stand at 3.5 pct lower that a year earlier.

However, the final reading of Britain's second GDP, which rose 0.3 pct from the last quarter, had a little impact on the pound.

Range for the week: $ 1.5600 - $ 1.6100.